EX-99.2

EX-99.2 3 d817742dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

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212 TH BUSINESS PARK KENT VALLEY, WASHINGTON SUPPLEMENTAL INFORMATION THIRD QUARTER 2019 701 WESTERN AVENUE | GLENDALE, CA 91201 | 818.244.8080 | SBUSINESSPARKS.COM

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ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019


		Page

Consolidated Balance Sheets		4
Consolidated Statements of Income		6
Portfolio Summary		8
Third Quarter Fact Sheet		9
Same Park Cash NOI and NOI by Region and Type		10
Analysis of Capital Expenditures		14
Funds from Operations (FFO), Core FFO and Funds Available for Distribution (FAD)		15
Capital Structure and Financial Condition		17
Portfolio Operating Analysis and Statistics		18
Lease Expirations		25
Quarter- and Year-to-Date Production Statistics		29
Multifamily Summary		30

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Forward-Looking Statement

When used within this supplemental information package, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company’s facilities; the Company’s ability to evaluate, finance and integrate acquired and developed properties into the Company’s existing operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory environment, as well as national, state and local laws and regulations including, without limitation, those governing REITs; the impact of general economic conditions upon rental rates and occupancy levels at the Company’s facilities; the availability of permanent capital at attractive rates, the outlook and actions of rating agencies and risks detailed from time to time in the Company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.

Non-GAAP Disclosures

Provided within this supplemental information package are measures not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). We believe our presentation of these non-GAAP measures assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. These non-GAAP measures discussed below are not substitutes of other measures of financial performance presented in accordance with GAAP. In addition, other real estate investment trusts (“REITs”) may compute these measures differently, so comparisons among REITs may not be helpful.

Net operating income (“NOI”) – We utilize NOI, a non-GAAP financial measure, to evaluate the operating performance of our business parks. We define NOI as rental income less adjusted cost of operations (described below). We believe NOI assists investors in analyzing the performance and value of our business parks by excluding (i) corporate overhead (i.e. general and administrative expenses) because it does not relate to the results of our business parks, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of our business parks and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods. The GAAP measure most directly comparable to NOI is net income.

Cash NOI – We utilized cash NOI to evaluate the cash flow performance of our business parks. Cash NOI represents NOI adjusted to exclude non-cash items included in revenue and in cost of operations. The non-cash items in revenue include straight-line rent, amortization of above and below market rents, net, and amortization of lease incentives and tenant improvement reimbursements. The non-cash items in cost of operations is equal to stock compensation expense for employees whose compensation expense is recorded in cost of operations. We believe that cash NOI assists investors in analyzing cash flow performance of our business parks. The GAAP measure most directly comparable to cash NOI is net income.

Adjusted Cost of Operations – Adjusted cost of operations represents cost of operations, excluding non-cash stock compensation expense for employees whose compensation expense is recorded in cost of operations, which can vary significantly period to period based upon the performance of the company. The GAAP measure most directly comparable to adjusted cost of operations is cost of operations.

Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – EBITDAre is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and is often utilized to evaluate the performance of real estate companies. EBITDAre is calculated as GAAP net income before interest, depreciation and amortization and adjusted to exclude gains or losses from sales of depreciable real estate assets. We believe our presentation of EBITDAre assists investors and analysts in evaluating the operating performance of our business activities, including the impact of general and administrative expenses, and without the impact from gains or losses from sales of depreciable real estate assets. The GAAP measure most directly comparable EBITDAre is net income.

Funds from Operations (“FFO”) and FFO per share – FFO and FFO per share are non-GAAP measures defined by NAREIT and are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents GAAP net income before real estate depreciation and amortization expense, gains or losses on sales of operating properties and land and impairment charges on real estate assets, which are excluded because it does not accurately reflect changes in the value of our business parks. FFO per share represents FFO allocable to common and dilutive shares, divided by aggregate common and dilutive shares. The GAAP measure most directly comparable to FFO and FFO per share are net income and earnings per share, respectively.

Core FFO and Core FFO per share – Core FFO represents FFO excluding the net impact of (i) income allocated to preferred shareholders to the extent redemption value exceeds the related carrying value and (ii) nonrecurring income or expense items. Core FFO per share represents Core FFO allocable to common and dilutive shares divided by the weighted average common and dilutive shares. We believe our presentation of Core FFO and Core FFO per share assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. The GAAP measures most directly comparable to Core FFO and Core FFO per share are net income and earnings per share, respectively.

Funds Available for Distribution (“FAD”) – FAD is a non-GAAP measure that represents Core FFO adjusted to (a) deduct recurring capital improvements that maintains the condition of our real estate, tenant improvements and lease commissions and (b) remove certain non-cash income or expenses such as straight-line rent and non-cash stock compensation expense. We believe our presentation of FAD assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. FAD is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. The GAAP measure most directly comparable to FAD is operating cash flow from our statements of cash flows.

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	September 30, 2019		December 31, 2018
ASSETS

Cash and cash equivalents	$	6,749	$	37,379	(a)

Real estate facilities, at cost ⁽¹⁾
Land		837,891		762,731
Buildings and improvements		2,212,166		2,157,407

		3,050,057		2,920,138
Accumulated depreciation		(1,152,946)		(1,097,748)

		1,897,111		1,822,390	(b)
Properties held for sale, net ⁽²⁾		124,937		128,093	(c)
Land and building held for development		30,515		30,848

		2,052,563		1,981,331

Rent receivable		1,752		1,403	(d)
Deferred rent receivable		35,548		33,308
Other assets		21,122		15,173	(e)

Total assets	$	2,117,734	$	2,068,594


LIABILITIES AND EQUITY

Accrued and other liabilities	$	92,252	$	85,141	(f)
Credit facility		50,000		-

Total liabilities		142,252		85,141

Equity
PS Business Parks, Inc.’s shareholders’ equity:
Preferred stock		959,750		959,750
Common stock		274		274
Paid-in capital		734,760		736,131	(g)
Accumulated earnings		64,775		69,207	(h)

Total PS Business Parks, Inc.’s shareholders’ equity		1,759,559		1,765,362
Noncontrolling interests		215,923		218,091

Total equity		1,975,482		1,983,453

Total liabilities and equity	$	2,117,734	$	2,068,594

⁽¹⁾

On September 5, 2019 the Company acquired Hathaway Industrial Park (the “Park”) located in Santa Fe Springs, California, for a total purchase price of $104.3 million, inclusive of capitalized transaction costs. The Park consists of ten buildings totaling 543,000 square feet situated on 27 acres of land and is 100% occupied with suites ranging from 5,000 to 288,000 square feet.

⁽²⁾

Subsequent to September 30, 2019, the Company completed the sale of all three business parks located in Montgomery County, Maryland: Metro Park North, Meadow Business Park and WesTech Business Park. The parks, consisting of 28 buildings totaling approximately 1.3 million square feet, sold for a gross sales price of $148.8 million. The Company retained one single-tenant government building totaling 113,000 square feet and a long-term ground lease at Metro Park North. The portfolio of assets which sold represents the entirety of the properties held for sale, net as of September 30, 2019 and December 31, 2018.

See following page for additional detail related to the tickmarks shown in the table above.

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(a)	Change in cash and cash equivalents
	Beginning cash balance at December 31, 2018					$	37,379
	Net cash provided by operating activities						220,863
	Net cash used in investing activities						(146,836	)
	Net cash used in financing activities						(104,657	)

	Ending cash balance at September 30, 2019					$	6,749


(b)	Change in real estate facilities
	Beginning balance at December 31, 2018					$	1,822,390
	Acquisition of real estate						115,925
	Recurring capital improvements						6,336
	Tenant improvements, gross						12,162
	Capitalized lease commissions						6,027
	Nonrecurring capital improvements						2,011
	Depreciation and amortization						(70,896	)
	Transfer to properties held for sale						3,156

	Ending balance at September 30, 2019					$	1,897,111


(c)	Change in properties held for sale, net:
	Beginning balance at December 31, 2018					$	128,093
	Recurring capital improvements						899
	Depreciation and amortization						(4,055	)

	Ending balance at September 30, 2019					$	124,937


							Increase
(d)	Change in rent receivable	September 30, 2019		December 31, 2018		(Decrease)
	Non-government customers	$	804	$	640	$	164
	U.S. Government customers		948		763		185

		$	1,752	$	1,403	$	349


							Increase
(e)	Change in other assets	September 30, 2019		December 31, 2018		(Decrease)
	Lease intangible assets, net	$	10,982	$	8,671	$	2,311
	Prepaid property taxes and insurance		5,514		3,381		2,133
	Other		4,626		3,121		1,505

		$	21,122	$	15,173	$	5,949


							Increase
(f)	Change in accrued and other liabilities	September 30, 2019		December 31, 2018		(Decrease)
	Customer security deposits	$	40,065	$	37,557	$	2,508
	Accrued property taxes		19,982		10,454		9,528
	Customer prepaid rent		11,988		16,830		(4,842	)
	Lease intangible liabilities, net		9,315		7,870		1,445
	Other		10,902		12,430		(1,528	)

		$	92,252	$	85,141	$	7,111


(g)	Change in paid-in capital
	Beginning paid-in capital					$	736,131
	Exercise of stock options						709
	Stock compensation expense, net						3,292
	Cash paid for taxes in lieu of shares upon vesting of restricted stock units						(6,120	)
	Adjustment to reflect noncontrolling interests underlying ownership - common units						748

	Ending paid in capital					$	734,760


(h)	Change in accumulated earnings
	Beginning accumulated earnings					$	69,207
	Net income						120,788
	Distributions to preferred shareholders						(38,877	)
	Distributions to common shareholders						(86,343	)

	Ending accumulated earnings					$	64,775

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	For The Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2019			2018			2019			2018
Rental income	$	108,064		$	103,808		$	323,671		$	309,391		(a	)

Expenses
Cost of operations ⁽¹⁾		32,468			31,197			97,521			94,449		(b	)
Depreciation and amortization		26,220			25,207			75,863			73,505
General and administrative ⁽¹⁾⁽²⁾		4,051			2,882			10,111			8,560		(c	)

Total operating expenses		62,739			59,286			183,495			176,514


Interest and other income		1,384			488			2,766			1,066		(d	)
Interest and other expense		(199	)		(167	)		(484	)		(499	)	(e	)
Gain on sale of real estate facilities		-			-			-			85,283

Net income		46,510			44,843			142,458			218,727
Allocation to noncontrolling interests		(7,020	)		(6,514	)		(21,670	)		(36,814	)

Net income allocable to PS Business Parks, Inc.		39,490			38,329			120,788			181,913
Allocation to preferred shareholders		(12,959	)		(12,959	)		(38,877	)		(38,921	)
Allocation to restricted stock unit holders		(219	)		(239	)		(699	)		(1,592	)

Net income allocable to common shareholders	$	26,312		$	25,131		$	81,212		$	141,400


Net income per common share
Basic	$	0.96		$	0.92		$	2.96		$	5.18
Diluted	$	0.96		$	0.92		$	2.95		$	5.16

Weighted average common shares outstanding
Basic		27,432			27,339			27,411			27,310
Diluted		27,543			27,442			27,512			27,412

⁽¹⁾

Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified our divisional vice presidents’ compensation costs totaling $457,000 for the three months ended September 30, 2018, consisting of $305,000 of compensation costs and $152,000 of stock compensation expense, and compensation costs totaling $1.5 million for the nine months ended September 30, 2018, consisting of $995,000 of compensation costs and $466,000 of stock compensation expense, from cost of operations into general and administrative expenses on our consolidated statements of income in the three and nine months ended September 30, 2018 in order to conform to the current periods’ presentation.

⁽²⁾	During the three and nine months ended September 30, 2019, we recorded a one-time charge to stock compensation expense of $1.1 million resulting from a modification to the Retirement Plan for Non-Employee Directors.

See following page for additional detail related to the tickmarks shown in the table above.

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		For The Three Months Ended				Increase		For the Nine Months Ended				Increase
(a)	Rental income:	September 30, 2019		September 30, 2018		(Decrease)		September 30, 2019		September 30, 2018		(Decrease)
	Same Park	$	95,451	$	91,185	$	4,266	$	285,880	$	272,833	$	13,047
	Same Park non-cash items ⁽¹⁾		783		1,171		(388)		1,992		3,143		(1,151)
	Non-Same Park		3,340		2,185		1,155		8,853		2,749		6,104
	Non-Same Park non-cash items ⁽¹⁾		258		170		88		655		233		422
	Multifamily		2,518		1,891		627		7,488		5,035		2,453
	Multifamily non-cash items ⁽¹⁾		1		4		(3)		4		22		(18)
	Revenue from assets sold and held for sale ⁽²⁾		5,713		7,202		(1,489)		18,799		25,376		(6,577)

		$	108,064	$	103,808	$	4,256	$	323,671	$	309,391	$	14,280


		For The Three Months Ended				Increase		For the Nine Months Ended				Increase
(b)	Cost of operations:	September 30, 2019		September 30, 2018		(Decrease)		September 30, 2019		September 30, 2018		(Decrease)
	Same Park	$	27,724	$	26,252	$	1,472	$	83,113	$	79,840	$	3,273
	Same Park non-cash items ⁽³⁾		278		315		(37)		820		962		(142)
	Non-Same Park		1,137		753		384		3,304		977		2,327
	Non-Same Park non-cash items ⁽³⁾		15		18		(3)		41		18		23
	Multifamily		1,045		1,043		2		3,118		3,013		105
	Expenses from assets sold and held for sale ⁽²⁾		2,269		2,816		(547)		7,125		9,639		(2,514)

		$	32,468	$	31,197	$	1,271	$	97,521	$	94,449	$	3,072


		For The Three Months Ended				Increase		For the Nine Months Ended				Increase
(c)	General and administrative expenses:	September 30, 2019		September 30, 2018		(Decrease)		September 30, 2019		September 30, 2018		(Decrease)
	Compensation expense	$	1,333	$	1,161	$	172	$	4,294	$	4,134	$	160
	Stock compensation expense		1,793		796		997		3,081		1,870		1,211
	Professional fees and other		925		925		-		2,736		2,556		180

		$	4,051	$	2,882	$	1,169	$	10,111	$	8,560	$	1,551


		For The Three Months Ended				Increase		For the Nine Months Ended				Increase
(d)	Interest and other income:	September 30, 2019		September 30, 2018		(Decrease)		September 30, 2019		September 30, 2018		(Decrease)
	Management fee income	$	71	$	93	$	(22)	$	221	$	331	$	(110)
	Interest income		175		111		64		817		219		598
	Other income		1,138		284		854		1,728		516		1,212

		$	1,384	$	488	$	896	$	2,766	$	1,066	$	1,700


		For The Three Months Ended				Increase		For the Nine Months Ended				Increase
(e)	Interest and other expense:	September 30, 2019		September 30, 2018		(Decrease)		September 30, 2019		September 30, 2018		(Decrease)
	Interest expense	$	(47)	$	-	$	47	$	(47)	$	(18)	$	29
	Facilities fees & other charges		(152)		(167)		(15)		(437)		(481)		(44)

		$	(199)	$	(167)	$	32	$	(484)	$	(499)	$	(15)

⁽¹⁾	Non-cash items in revenue represent straight-line rent, amortization of above and below market rents, net, and amortization of lease incentives and tenant improvement reimbursements.

⁽²⁾

Amounts for the three and nine months ended September 30, 2019 reflect the operating results related to 1.3 million square feet of flex and office assets held for sale as of September 30, 2019; amounts shown for the three and nine months ended September 30, 2018 reflect the operating results related to 1.3 million square feet of flex and office assets held for sale as of September 30, 2019, as well as operating results related to 899,000 square feet of assets sold in 2018.

⁽³⁾	Non-cash items in cost of operations represent stock compensation expense attributable to employees whose compensation expense is recorded in costs of operations.

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PROPERTY INFORMATION ⁽¹⁾


	For The Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019		2018		% Change		2019		2018		% Change
Total Portfolio (2)
Total rentable square footage at period end		27,483,000		26,866,000		2.3%		27,483,000		26,866,000		2.3%
Weighted average occupancy		94.5%		94.4%		0.1%		94.1%		94.4%		(0.3%)
Period end occupancy		94.4%		94.8%		(0.4%)		94.4%		94.8%		(0.4%)
Annualized realized rent per occupied sq. ft.^(3) (5)	$	15.60	$	14.94		4.4%	$	15.62	$	15.01		4.1%
RevPAF^{(4) (5)}	$	14.74	$	14.10		4.5%	$	14.70	$	14.16		3.8%

Same Park Portfolio ⁽⁶⁾
Total rentable square footage at period end		25,809,000		25,809,000		-		25,809,000		25,809,000		-
Weighted average occupancy		94.7%		95.1%		(0.4%)		94.6%		94.7%		(0.1%)
Period end occupancy		94.5%		95.6%		(1.2%)		94.5%		95.6%		(1.2%)
Annualized realized rent per occupied sq. ft.^(3) (5)	$	15.74	$	15.05		4.6%	$	15.72	$	15.05		4.5%
RevPAF^{(4) (5)}	$	14.91	$	14.31		4.2%	$	14.87	$	14.26		4.3%

Non-Same Park Portfolio ⁽⁷⁾
Total rentable square footage at period end		1,674,000		1,057,000		58.4%		1,674,000		1,057,000		58.4%
Weighted average occupancy		89.5%		75.8%		18.1%		83.8%		75.9%		10.4%
Period end occupancy		93.3%		76.2%		22.4%		93.3%		76.2%		22.4%
Annualized realized rent per occupied sq. ft.⁽³⁾	$	12.51	$	11.76		6.4%		13.11		11.76		11.5%
RevPAF⁽⁴⁾	$	11.21	$	8.91		25.8%		11.00		8.93		23.2%

Multifamily Portfolio
Number of units		395		395		-		395		395		-
Weighted average occupancy		95.6%		87.8%		8.9%		95.3%		73.1%		30.4%
Period end occupancy		94.7%		91.4%		3.6%		94.7%		91.4%		3.6%

⁽¹⁾	Excludes 1.3 million rentable square feet of flex and office assets held for sale and 899,000 square feet of assets sold in 2018.

⁽²⁾	Operating metrics from our multifamily asset are excluded from the total portfolio operating metrics.

⁽³⁾	Annualized realized rent per occupied square foot represents the annualized revenue earned per occupied square foot.

⁽⁴⁾	RevPAF represents the annualized revenue earned per total weighted average available square foot.

⁽⁵⁾

Total and Same Park annualized realized rent per occupied square foot and RevPAF include lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

⁽⁶⁾	Same Park includes assets acquired prior to January 1, 2017.

⁽⁷⁾	Non-Same Park reflects assets acquired on or subsequent to January 1, 2017.

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NET OPERATING INCOME


	For The Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019		2018		% Change		2019		2018		% Change
Rental income
Same Park ⁽¹⁾	$	96,234	$	92,356		4.2%	$	287,872	$	275,976		4.3%
Non-Same Park ⁽²⁾		3,598		2,355		52.8%		9,508		2,982		218.8%
Multifamily		2,519		1,895		32.9%		7,492		5,057		48.2%
Assets sold or held for sale ⁽⁴⁾		5,713		7,202		(20.7%)		18,799		25,376		(25.9%)

Total rental income		108,064		103,808		4.1%		323,671		309,391		4.6%

Adjusted cost of operations ⁽³⁾
Same Park ⁽¹⁾		27,724		26,252		5.6%		83,113		79,840		4.1%
Non-Same Park ⁽²⁾		1,137		753		51.0%		3,304		977		238.2%
Multifamily		1,045		1,043		0.2%		3,118		3,013		3.5%
Assets sold or held for sale ⁽⁴⁾		2,253		2,793		(19.3%)		7,076		9,556		(26.0%)

Total adjusted cost of operations		32,159		30,841		4.3%		96,611		93,386		3.5%

Net operating income
Same Park ⁽¹⁾		68,510		66,104		3.6%		204,759		196,136		4.4%
Non-Same Park ⁽²⁾		2,461		1,602		53.6%		6,204		2,005		209.4%
Multifamily		1,474		852		73.0%		4,374		2,044		114.0%
Assets sold or held for sale ⁽⁴⁾		3,460		4,409		(21.5%)		11,723		15,820		(25.9%)

Total net operating income	$	75,905	$	72,967		4.0%	$	227,060	$	216,005		5.1%


CASH NET OPERATING INCOME

	For The Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019		2018		% Change		2019		2018		% Change
Cash rental income ⁽⁵⁾
Same Park ⁽¹⁾	$	95,451	$	91,185		4.7%	$	285,880	$	272,833		4.8%
Non-Same Park ⁽²⁾		3,340		2,185		52.9%		8,853		2,749		222.0%
Multifamily		2,518		1,891		33.2%		7,488		5,035		48.7%
Assets sold or held for sale ⁽⁴⁾		5,633		7,019		(19.7%)		18,382		24,773		(25.8%)

Total cash rental income		106,942		102,280		4.6%		320,603		305,390		5.0%

Adjusted cost of operations ⁽³⁾
Same Park ⁽¹⁾		27,724		26,252		5.6%		83,113		79,840		4.1%
Non-Same Park ⁽²⁾		1,137		753		51.0%		3,304		977		238.2%
Multifamily		1,045		1,043		0.2%		3,118		3,013		3.5%
Assets sold or held for sale ⁽⁴⁾		2,253		2,793		(19.3%)		7,076		9,556		(26.0%)

Total adjusted cost of operations		32,159		30,841		4.3%		96,611		93,386		3.5%

Cash net operating income
Same Park ⁽¹⁾		67,727		64,933		4.3%		202,767		192,993		5.1%
Non-Same Park ⁽²⁾		2,203		1,432		53.8%		5,549		1,772		213.1%
Multifamily		1,473		848		73.7%		4,370		2,022		116.1%
Assets sold or held for sale ⁽⁴⁾		3,380		4,226		(20.0%)		11,306		15,217		(25.7%)

Total cash net operating income	$	74,783	$	71,439		4.7%	$	223,992	$	212,004		5.7%


EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre)

	For The Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019		2018		% Change		2019		2018		% Change
Net income	$	46,510	$	44,843		3.7%	$	142,458	$	218,727		(34.9%)
Net interest (income) expense		8		28		(71.4%)		(362)		199		(281.9%)
Depreciation and amortization		26,220		25,207		4.0%		75,863		73,505		3.2%
Gain on sale of real estate facilities and development rights		-		-		-		-		(85,283)		(100.0%)

EBITDAre	$	72,738	$	70,078		3.8%	$	217,959	$	207,148		5.2%

⁽¹⁾

Same Park includes assets acquired prior to January 1, 2017. Same Park rental income and cash rental income include lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

⁽²⁾	Non-Same Park reflects assets acquired on or subsequent to January 1, 2017.

⁽³⁾

Adjusted cost of operations represents cost of operations excluding non-cash stock compensation expense for employees whose compensation expense is recorded in cost of operations. Refer to the “Forward-Looking Statement and Non-GAAP Disclosures” on page 3 for more information. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $305,000 and $995,000 for the three and nine months ended September 30, 2018, respectively, from adjusted cost of operations into general and administrative expenses in order to conform to the current periods’ presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $152,000 and $466,000 for the three and nine months ended September 30, 2018, respectively, had previously been excluded from adjusted cost of operations.

⁽⁴⁾

NOI from assets held for sale was $3.5 million and $4.2 million for the three months ended September 30, 2019 and 2018, respectively, and $11.7 million and $12.8 million for the nine months ended September 30, 2019 and 2018, respectively. Cash NOI from assets held for sale was $3.4 million and $4.1 million for the three months ended September 30, 2019 and 2018, respectively, and $11.3 million and $12.3 million for the nine months ended September 30, 2019 and 2018, respectively. The remainder of the three and nine months September 30, 2018 NOI balances relate to assets that sold during 2018.

⁽⁵⁾	Cash rental income excludes non-cash items, specifically straight-line rent, amortization of above and below market rents, net, amortization of lease incentives and tenant improvement reimbursements.

LOGO


	For the Three Months Ended
	September 30, 2019								September 30, 2018								Total
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		% Change
Cash rental income ⁽¹⁾
Northern California	$	20,648	$	2,519	$	3,058	$	26,225	$	19,692	$	2,380	$	2,915	$	24,987		5.0%
Southern California		8,704		4,844		205		13,753		8,681		4,580		137		13,398		2.6%
Dallas		3,057		5,296		—		8,353		2,832		4,630		—		7,462		11.9%
Austin		2,122		5,552		—		7,674		2,033		5,233		—		7,266		5.6%
Northern Virginia		1,756		6,360		10,123		18,239		1,719		6,069		9,975		17,763		2.7%
South Florida		10,334		497		45		10,876		9,783		505		(3)		10,285		5.7%
Suburban Maryland		1,071		—		4,706		5,777		1,122		—		4,504		5,626		2.7%
Seattle		2,802		1,567		185		4,554		2,677		1,537		184		4,398		3.5%

Total		50,494		26,635		18,322		95,451		48,539		24,934		17,712		91,185		4.7%

Adjusted cost of operations ⁽²⁾
Northern California		4,839		666		832		6,337		4,348		609		682		5,639		12.4%
Southern California		2,215		1,341		76		3,632		2,145		1,222		71		3,438		5.6%
Dallas		933		2,047		—		2,980		920		1,814		—		2,734		9.0%
Austin		713		2,131		—		2,844		684		2,007		—		2,691		5.7%
Northern Virginia		493		1,823		3,628		5,944		450		1,709		3,789		5,948		(0.1%)
South Florida		2,734		158		22		2,914		2,566		132		22		2,720		7.1%
Suburban Maryland		370		—		1,624		1,994		323		—		1,665		1,988		0.3%
Seattle		659		370		50		1,079		662		375		57		1,094		(1.4%)

Total		12,956		8,536		6,232		27,724		12,098		7,868		6,286		26,252		5.6%

Cash NOI
Northern California		15,809		1,853		2,226		19,888		15,344		1,771		2,233		19,348		2.8%
Southern California		6,489		3,503		129		10,121		6,536		3,358		66		9,960		1.6%
Dallas		2,124		3,249		—		5,373		1,912		2,816		—		4,728		13.6%
Austin		1,409		3,421		—		4,830		1,349		3,226		—		4,575		5.6%
Northern Virginia		1,263		4,537		6,495		12,295		1,269		4,360		6,186		11,815		4.1%
South Florida		7,600		339		23		7,962		7,217		373		(25)		7,565		5.2%
Suburban Maryland		701		—		3,082		3,783		799		—		2,839		3,638		4.0%
Seattle		2,143		1,197		135		3,475		2,015		1,162		127		3,304		5.2%

Total	$	37,538	$	18,099	$	12,090	$	67,727	$	36,441	$	17,066	$	11,426	$	64,933		4.3%

⁽¹⁾

Cash rental income excludes non-cash items, specifically straight-line rent, amortization of above and below market rents, net, amortization of lease incentives and tenant improvement reimbursements. Cash rental income includes lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively.

⁽²⁾

Adjusted cost of operations represents cost of operations excluding non-cash stock compensation expense related to employees whose compensation expense is included in costs of operations. Refer to the “Forward-Looking Statement and Non-GAAP Disclosures” on page 3 for more information. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $281,000 for the three months ended September 30, 2018 from adjusted cost of operations into general and administrative expenses in order to conform to the current periods’ presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $143,000 for the three months ended September 30, 2018 had previously been excluded from adjusted cost of operations.

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	For the Nine Months Ended
	September 30, 2019								September 30, 2018
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		% Change
Cash rental income ⁽¹⁾
Northern California	$	62,481	$	7,414	$	9,016	$	78,911	$	58,199	$	7,092	$	8,455	$	73,746		7.0%
Southern California		26,188		14,130		573		40,891		25,626		13,485		472		39,583		3.3%
Dallas		9,253		15,868		—		25,121		8,475		13,988		—		22,463		11.8%
Austin		6,303		16,549		—		22,852		6,014		16,481		—		22,495		1.6%
Northern Virginia		5,300		18,888		30,942		55,130		5,171		18,566		30,065		53,802		2.5%
South Florida		30,944		1,423		71		32,438		29,508		1,521		83		31,112		4.3%
Suburban Maryland		3,373		—		13,754		17,127		3,378		—		13,306		16,684		2.7%
Seattle		8,165		4,697		548		13,410		7,948		4,452		548		12,948		3.6%

Total		152,007		78,969		54,904		285,880		144,319		75,585		52,929		272,833		4.8%

Adjusted cost of operations ⁽²⁾
Northern California		13,811		1,976		2,380		18,167		12,873		1,870		2,132		16,875		7.7%
Southern California		6,652		3,796		221		10,669		6,288		3,505		200		9,993		6.8%
Dallas		2,830		5,988		—		8,818		2,810		5,530		—		8,340		5.7%
Austin		2,153		6,301		—		8,454		2,023		6,009		—		8,032		5.3%
Northern Virginia		1,572		5,550		11,808		18,930		1,515		5,501		11,901		18,917		0.1%
South Florida		8,264		454		81		8,799		7,912		390		47		8,349		5.4%
Suburban Maryland		1,070		—		5,025		6,095		1,030		—		5,040		6,070		0.4%
Seattle		1,906		1,126		149		3,181		1,999		1,097		168		3,264		(2.5%)

Total		38,258		25,191		19,664		83,113		36,450		23,902		19,488		79,840		4.1%

Cash NOI
Northern California		48,670		5,438		6,636		60,744		45,326		5,222		6,323		56,871		6.8%
Southern California		19,536		10,334		352		30,222		19,338		9,980		272		29,590		2.1%
Dallas		6,423		9,880		—		16,303		5,665		8,458		—		14,123		15.4%
Austin		4,150		10,248		—		14,398		3,991		10,472		—		14,463		(0.4%)
Northern Virginia		3,728		13,338		19,134		36,200		3,656		13,065		18,164		34,885		3.8%
South Florida		22,680		969		(10)		23,639		21,596		1,131		36		22,763		3.8%
Suburban Maryland		2,303		—		8,729		11,032		2,348		—		8,266		10,614		3.9%
Seattle		6,259		3,571		399		10,229		5,949		3,355		380		9,684		5.6%

Total	$	113,749	$	53,778	$	35,240	$	202,767	$	107,869	$	51,683	$	33,441	$	192,993		5.1%

⁽¹⁾

Cash rental income excludes non-cash items, specifically straight-line rent, amortization of above and below market rents, net, amortization of lease incentives and tenant improvement reimbursements. Cash rental income includes lease buyout income of $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

⁽²⁾

Adjusted cost of operations represents cost of operations excluding non-cash stock compensation expense related to employees whose compensation expense is included in costs of operations. Refer to the “Forward-Looking Statement and Non-GAAP Disclosures” on page 3 for more information. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $936,000 for the nine months ended September 30, 2018 from adjusted cost of operations into general and administrative expenses in order to conform to the current periods’ presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $445,000 for the nine months ended September 30, 2018 had previously been excluded from adjusted cost of operations.

LOGO


	For the Three Months Ended
	September 30, 2019								September 30, 2018								Total
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		% Change
Rental income ⁽¹⁾
Northern California	$	21,035	$	2,485	$	3,050	$	26,570	$	19,749	$	2,369	$	2,937	$	25,055		6.0%
Southern California		8,835		4,823		206		13,864		8,750		4,534		149		13,433		3.2%
Dallas		3,078		5,388		—		8,466		2,892		4,782		—		7,674		10.3%
Austin		2,103		5,585		—		7,688		1,970		5,290		—		7,260		5.9%
Northern Virginia		1,855		6,221		10,245		18,321		1,837		6,142		10,481		18,460		(0.8%)
South Florida		10,455		498		46		10,999		9,966		473		(3)		10,436		5.4%
Suburban Maryland		1,066		—		4,757		5,823		1,108		—		4,581		5,689		2.4%
Seattle		2,753		1,568		182		4,503		2,627		1,539		183		4,349		3.5%

Total		51,180		26,568		18,486		96,234		48,899		25,129		18,328		92,356		4.2%

Adjusted cost of operations ⁽²⁾
Northern California		4,839		666		832		6,337		4,348		609		682		5,639		12.4%
Southern California		2,215		1,341		76		3,632		2,145		1,222		71		3,438		5.6%
Dallas		933		2,047		—		2,980		920		1,814		—		2,734		9.0%
Austin		713		2,131		—		2,844		684		2,007		—		2,691		5.7%
Northern Virginia		493		1,823		3,628		5,944		450		1,709		3,789		5,948		(0.1%)
South Florida		2,734		158		22		2,914		2,566		132		22		2,720		7.1%
Suburban Maryland		370		—		1,624		1,994		323		—		1,665		1,988		0.3%
Seattle		659		370		50		1,079		662		375		57		1,094		(1.4%)

Total		12,956		8,536		6,232		27,724		12,098		7,868		6,286		26,252		5.6%

NOI
Northern California		16,196		1,819		2,218		20,233		15,401		1,760		2,255		19,416		4.2%
Southern California		6,620		3,482		130		10,232		6,605		3,312		78		9,995		2.4%
Dallas		2,145		3,341		—		5,486		1,972		2,968		—		4,940		11.1%
Austin		1,390		3,454		—		4,844		1,286		3,283		—		4,569		6.0%
Northern Virginia		1,362		4,398		6,617		12,377		1,387		4,433		6,692		12,512		(1.1%)
South Florida		7,721		340		24		8,085		7,400		341		(25)		7,716		4.8%
Suburban Maryland		696		—		3,133		3,829		785		—		2,916		3,701		3.5%
Seattle		2,094		1,198		132		3,424		1,965		1,164		126		3,255		5.2%

Total	$	38,224	$	18,032	$	12,254	$	68,510	$	36,801	$	17,261	$	12,042	$	66,104		3.6%

⁽¹⁾	Rental income includes lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively.

⁽²⁾

Adjusted cost of operations represents cost of operations excluding non-cash stock compensation expense related to employees whose compensation expense is included in cost of operations. Refer to the “Forward-Looking Statement and Non-GAAP Disclosures” on page 3 for more information. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $281,000 for the three months ended September 30, 2018 from adjusted cost of operations into general and administrative expenses in order to conform to the current periods’ presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $143,000 for the three months ended September 30, 2018 had previously been excluded from adjusted cost of operations.

LOGO


	For the Nine Months Ended
	September 30, 2019								September 30, 2018								Total
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		% Change
Rental income ⁽¹⁾
Northern California	$	63,078	$	7,334	$	8,997	$	79,409	$	58,447	$	7,075	$	8,554	$	74,076		7.2%
Southern California		26,316		14,119		578		41,013		25,671		13,438		482		39,591		3.6%
Dallas		9,391		16,076		—		25,467		8,640		14,261		—		22,901		11.2%
Austin		6,321		16,781		—		23,102		5,938		16,567		—		22,505		2.7%
Northern Virginia		5,580		18,348		31,525		55,453		5,523		18,623		31,503		55,649		(0.4%)
South Florida		31,077		1,429		109		32,615		29,941		1,443		83		31,467		3.6%
Suburban Maryland		3,316		—		14,201		17,517		3,366		—		13,593		16,959		3.3%
Seattle		8,046		4,708		542		13,296		7,826		4,453		549		12,828		3.6%

Total		153,125		78,795		55,952		287,872		145,352		75,860		54,764		275,976		4.3%

Adjusted cost of operations ⁽²⁾
Northern California		13,811		1,976		2,380		18,167		12,873		1,870		2,132		16,875		7.7%
Southern California		6,652		3,796		221		10,669		6,288		3,505		200		9,993		6.8%
Dallas		2,830		5,988		—		8,818		2,810		5,530		—		8,340		5.7%
Austin		2,153		6,301		—		8,454		2,023		6,009		—		8,032		5.3%
Northern Virginia		1,572		5,550		11,808		18,930		1,515		5,501		11,901		18,917		0.1%
South Florida		8,264		454		81		8,799		7,912		390		47		8,349		5.4%
Suburban Maryland		1,070		—		5,025		6,095		1,030		—		5,040		6,070		0.4%
Seattle		1,906		1,126		149		3,181		1,999		1,097		168		3,264		(2.5%)

Total		38,258		25,191		19,664		83,113		36,450		23,902		19,488		79,840		4.1%

NOI
Northern California		49,267		5,358		6,617		61,242		45,574		5,205		6,422		57,201		7.1%
Southern California		19,664		10,323		357		30,344		19,383		9,933		282		29,598		2.5%
Dallas		6,561		10,088		—		16,649		5,830		8,731		—		14,561		14.3%
Austin		4,168		10,480		—		14,648		3,915		10,558		—		14,473		1.2%
Northern Virginia		4,008		12,798		19,717		36,523		4,008		13,122		19,602		36,732		(0.6%)
South Florida		22,813		975		28		23,816		22,029		1,053		36		23,118		3.0%
Suburban Maryland		2,246		—		9,176		11,422		2,336		—		8,553		10,889		4.9%
Seattle		6,140		3,582		393		10,115		5,827		3,356		381		9,564		5.8%

Total	$	114,867	$	53,604	$	36,288	$	204,759	$	108,902	$	51,958	$	35,276	$	196,136		4.4%

⁽¹⁾	Rental income includes lease buyout income of $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

⁽²⁾

Adjusted cost of operations represents cost of operations excluding non-cash stock compensation expense related to employees whose compensation expense is included in cost of operations. Refer to the “Forward-Looking Statement and Non-GAAP Disclosures” on page 3 for more information. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $936,000 for the nine months ended September 30, 2018 from adjusted cost of operations into general and administrative expenses in order to conform to the current periods’ presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $445,000 for the nine months ended September 30, 2018 had previously been excluded from adjusted cost of operations.

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	For the Nine Months Ended September 30, 2019		Cost per Weighted Average Square Foot
Commercial recurring capital expenditures ⁽¹⁾
Same Park
Capital improvements	$	5,909	$	0.23
Tenant improvements		10,345		0.40
Lease commissions		5,439		0.21

Total Same Park recurring capital expenditures		21,693	$	0.84

Non-Same Park
Capital improvements		60	$	0.05
Tenant improvements		1,369		1.19
Lease commissions		340		0.29

Total Non-Same Park recurring capital expenditures		1,769	$	1.53

Total recurring capital expenditures		23,462	$	0.86
Assets sold or held for sale recurring capital expenditures		779

Total commercial recurring capital expenditures		24,241
Non-recurring property renovations ⁽²⁾		2,011

Total capital expenditures (excluding multifamily)		26,252
Multifamily capital expenditures		20

Total capital expenditures	$	26,272

⁽¹⁾

The Company defines “recurring capital expenditures” as capitalized costs necessary to continue to operate the property at its current economic value. Capital improvements in excess of $2,000 with a useful life greater than 24 months are capitalized. Lease transaction costs (i.e. tenant improvements and leasing commissions) of $1,000 or more for leases with terms greater than 12 months are capitalized. All leasing costs, including first generation tenant improvements and leasing commissions, are included in recurring capital expenditures.

⁽²⁾	Non-recurring property renovations represents renovations that substantially enhance the value of a property, including capitalized costs associated with repositioning acquired assets.

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	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Net income allocable to common shareholders	$	26,312	$	25,131	$	81,212	$	141,400
Adjustments
Gain on sale of real estate facilities		-		-		-		(85,283)
Depreciation and amortization		26,220		25,207		75,863		73,505
Net income allocable to noncontrolling interests		7,020		6,514		21,670		36,814
Net income allocable to restricted stock unit holders		219		239		699		1,592
FFO (income) loss allocated to joint venture partner		(39)		(3)		(105)		8

FFO allocable to common and dilutive shares		59,732		57,088		179,339		168,036

Core FFO allocable to common and dilutive shares		59,732		57,088		179,339		168,036
Adjustments
Recurring capital improvements		(2,547)		(2,789)		(5,969)		(5,840)
Tenant improvements		(3,250)		(4,708)		(11,714)		(10,609)
Capitalized lease commissions		(2,631)		(2,265)		(5,779)		(5,839)
Total recurring capital expenditures (assets sold)		(265)		(952)		(779)		(3,403)
Total recurring capital expenditures (multifamily)		(20)		-		(20)		(13)
Straight-line rent		(977)		(981)		(2,286)		(2,325)
In-place lease adjustment		(20)		12		5		35
Tenant improvement reimbursement amortization, net of lease incentive amortization		(125)		(556)		(788)		(1,690)
Stock compensation expense		2,102		1,152		3,991		2,933
Cash paid for taxes in lieu of shares upon vesting of restricted stock units		(620)		(426)		(6,120)		(4,955)

FAD allocable to common and dilutive shares		51,379		45,575		149,880		136,330
Distributions to common shareholders		(28,805)		(28,711)		(86,343)		(75,107)
Distributions to noncontrolling interests - common units		(7,671)		(7,671)		(23,012)		(20,090)
Distributions to restricted stock unit holders		(219)		(299)		(699)		(835)
Distributions to noncontrolling interests - joint venture		(33)		-		(78)		-

Free cash available after fixed charges		14,651		8,894		39,748		40,298
Non-recurring property renovations ⁽¹⁾		(56)		(20)		(2,011)		(113)
Investment in Highgate ⁽²⁾		-		-		-		(3,709)
Investment in The Mile redevelopment ⁽³⁾		(1,597)		(114)		(2,590)		(517)
Investment in Freeport development ⁽⁴⁾		(283)		-		(283)		-

Retained cash	$	12,715	$	8,760	$	34,864	$	35,959


Weighted average outstanding:
Common shares		27,432		27,339		27,411		27,310
Operating partnership units		7,305		7,305		7,305		7,305
Restricted stock units		113		163		126		183
Common share equivalents		111		103		101		102

Total common and dilutive shares		34,961		34,910		34,943		34,900


FFO per common and dilutive share	$	1.71	$	1.64	$	5.13	$	4.81
FAD distribution payout ratio ⁽⁵⁾		71.5%		80.5%		73.5%		70.4%

⁽¹⁾	Non-recurring property renovations represents renovations that substantially enhance the value of a property, including capitalized costs associated with repositioning acquired assets.

⁽²⁾	Represents development costs related to a 395-unit apartment complex that commenced operations during 2017.

⁽³⁾	Represents predevelopment costs related to a multifamily redevelopment project on a large contiguous block of real estate located in Tysons, Virginia.

⁽⁴⁾	Represents predevelopment costs related to an industrial development project located in Dallas, Texas.

⁽⁵⁾	FAD distribution payout ratio is equal to total distributions to common shareholders, unit holders, restricted stock unit holders and joint venture partner divided by FAD during the same reporting period.

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	As of September 30, 2019						As of December 31, 2018
			% of Total						% of Total
			Market		WTD Average				Market		WTD Average
	Total		Capitalization		Rate		Total		Capitalization		Rate

Unsecured Debt:
$250.0 million unsecured credit facility (LIBOR + 0.825%)	$	50,000		-		-	$	-		-		-

Total unsecured debt		50,000		0.7%		2.88%		-		-		-


Preferred Equity:
5.75% Series U preferred stock (9,200,000 depositary shares outstanding) callable 9/14/17		230,000		3.1%				230,000		4.2%
5.70% Series V preferred stock (4,400,000 depositary shares outstanding) callable 3/14/18		110,000		1.5%				110,000		2.0%
5.20% Series W preferred stock (7,590,000 depositary shares outstanding) callable 10/20/21		189,750		2.6%				189,750		3.4%
5.25% Series X preferred stock (9,200,000 depositary shares outstanding) callable 9/21/22		230,000		3.1%				230,000		4.2%
5.20% Series Y preferred stock (8,000,000 depositary shares outstanding) callable 12/7/22		200,000		2.7%				200,000		3.6%

Total preferred equity		959,750		13.1%		5.40%		959,750		17.4%		5.40%



Total debt and preferred equity		1,009,750		13.8%		5.28%		959,750		17.4%		5.40%


Common stock (27,435,139 and 27,362,101 shares outstanding as of September 30, 2019 and December 31, 2018, respectively) ⁽¹⁾		4,991,824		68.1%				3,584,435		65.2%
Common operating partnership units (7,305,355 units outstanding as of September 30, 2019 and December 31,2018) ⁽¹⁾		1,329,209		18.1%				957,002		17.4%

Total common equity ⁽¹⁾		6,321,033		86.2%				4,541,437		82.6%


Total market capitalization	$	7,330,783		100.0%			$	5,501,187		100.0%


Ratio of Debt and Preferred Equity to EBITDAre ⁽²⁾		3.5x						3.5x

	For the nine months ended September 30, 2019						For the year ended December 31, 2018
Interest expense and related expenses ⁽³⁾	$	455					$	555
Preferred distributions		38,877						51,880

Total fixed charges and preferred distributions	$	39,332					$	52,435


Ratio of EBITDAre to fixed charges and preferred distributions		5.5x						5.3x
Ratio of FFO to fixed charges and preferred distributions		5.6x						5.3x

⁽¹⁾

Total common equity is calculated as the total number of common stock and operating partnership units outstanding multiplied by the Company’s closing share price at the end of each reporting period. Closing share prices on September 30, 2019 and December 31, 2018 were $181.95 and $131.00, respectively.

⁽²⁾	Ratio of debt and preferred equity to EBITDAre is calculated as total debt and preferred equity divided by EBITDAre. Ratio of debt and preferred equity to EBITDAre as of September 30, 2019 is calculated using annualized EBITDAre for the nine months ended September 30, 2019.

⁽³⁾	Interest expense and related expenses includes facility fees associated with our unsecured credit facility.

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Industry Concentration as of September 30, 2019 ⁽¹⁾

					Percentage of
					Total Rental Income
Business services						19.3%
Warehouse, distribution, transportation and logistics						12.8%
Computer hardware, software and related services						10.9%
Health services						8.0%
Retail, food, and automotive						7.8%
Engineering and construction						7.6%
Government						7.1%
Insurance and financial services						3.3%
Electronics						2.9%
Home furnishings						2.7%
Aerospace/defense products and services						1.9%
Communications						1.8%
Educational services						1.1%
Other						12.8%

Total						100.0%


Top 10 Customers by Total Annual Rental Income as of September 30, 2019 ⁽¹⁾

	Square		Annualized		Percentage of Total
Customer	Footage		Rental Income ⁽²⁾		Annualized Rental Income

US Government		635,000	$	16,524		3.9%
Luminex Corp		199,000		4,023		1.0%
Lockheed Martin Corp		124,000		2,541		0.6%
CentralColo, LLC		96,000		2,321		0.6%
Applied Materials, Inc.		162,000		2,278		0.5%
KZ Kitchen Cabinet & Stone		192,000		2,260		0.5%
Carbel, LLC		207,000		2,091		0.5%
Quanta Computer Inc. and Quanta Manufacturing Nashville, LLC		179,000		1,826		0.4%
ECS Federal, LLC		81,000		1,803		0.4%
Investorplace Media, LLC		46,000		1,797		0.4%

Total		1,921,000	$	37,464		8.8%


Tenant Composition as of September 30, 2019 ⁽¹⁾

					Average Tenant Size
			Number		(in square feet)
			of Tenants		Average square footage
Large Tenants ⁽³⁾				1,377		13,217
Small Tenants ⁽⁴⁾				3,516		2,205

Total Portfolio				4,893		5,304

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

⁽²⁾	For leases expiring within one year, annualized rental income includes only the income to be received under the existing lease from October 1, 2019 through the respective date of expiration.

⁽³⁾	Large tenant portfolio consists of properties with average leases greater than or equal to 5,000 square feet.

⁽⁴⁾	Small tenant portfolio consists of properties with average leases less than 5,000 square feet.

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Realized Revenue per Occupied Square Foot ⁽¹⁾ ⁽²⁾
	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
Region	2019		2018		% Change	2019		2018		% Change
Northern California	$	15.11	$	14.13	6.9%	$	15.15	$	13.94	8.7%
Southern California	$	17.77	$	16.69	6.5%	$	17.52	$	16.42	6.7%
Dallas	$	12.81	$	11.87	7.9%	$	12.75	$	11.92	7.0%
Austin	$	17.14	$	16.18	5.9%	$	17.22	$	16.45	4.7%
Northern Virginia	$	19.83	$	20.02	(0.9%)	$	20.02	$	20.50	(2.3%)
South Florida	$	11.90	$	11.15	6.7%	$	11.78	$	11.25	4.7%
Suburban Maryland	$	20.49	$	21.21	(3.4%)	$	20.60	$	21.47	(4.1%)
Seattle	$	13.56	$	12.84	5.6%	$	13.35	$	12.57	6.2%
Total	$	15.74	$	15.05	4.6%	$	15.72	$	15.05	4.5%

Revenue per Available Foot (RevPAF) ⁽¹⁾ ⁽³⁾
	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
Region	2019		2018		% Change	2019		2018		% Change
Northern California	$	14.67	$	13.83	6.1%	$	14.61	$	13.63	7.2%
Southern California	$	16.89	$	16.37	3.2%	$	16.66	$	16.08	3.6%
Dallas	$	11.73	$	10.63	10.3%	$	11.76	$	10.58	11.2%
Austin	$	15.67	$	14.79	5.9%	$	15.69	$	15.29	2.6%
Northern Virginia	$	18.71	$	18.85	(0.7%)	$	18.88	$	18.94	(0.3%)
South Florida	$	11.38	$	10.80	5.4%	$	11.25	$	10.85	3.7%
Suburban Maryland	$	18.52	$	18.09	2.4%	$	18.57	$	17.97	3.3%
Seattle	$	12.96	$	12.52	3.5%	$	12.75	$	12.31	3.6%
Total	$	14.91	$	14.31	4.2%	$	14.87	$	14.26	4.3%

Realized Revenue per Occupied Square Foot ⁽¹⁾ ⁽²⁾
	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
Region	2019		2018		% Change	2019		2018		% Change
Industrial	$	12.97	$	12.22	6.1%	$	12.95	$	12.14	6.7%
Flex	$	18.74	$	17.92	4.6%	$	18.63	$	18.06	3.2%
Office	$	24.68	$	24.95	(1.1%)	$	24.84	$	25.36	(2.1%)
Total	$	15.74	$	15.05	4.6%	$	15.72	$	15.05	4.5%

Revenue per Available Foot (RevPAF) ⁽¹⁾ ⁽³⁾
	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
Region	2019		2018		% Change	2019		2018		% Change
Industrial	$	12.43	$	11.88	4.6%	$	12.40	$	11.77	5.4%
Flex	$	17.43	$	16.48	5.8%	$	17.23	$	16.59	3.9%
Office	$	22.79	$	22.59	0.9%	$	22.99	$	22.50	2.2%
Total	$	14.91	$	14.31	4.2%	$	14.87	$	14.26	4.3%

⁽¹⁾	Rental income includes lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

⁽²⁾	Represents revenue earned per occupied square foot. For the three and nine month periods ending September 30, 2019 and 2018, rental income amounts have been annualized.

⁽³⁾	Represents revenue earned per total weighted average available square foot. For the three and nine month periods ending September 30, 2019 and 2018, rental income amounts have been annualized.

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⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

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Rentable Square Footage of Same Park Properties by Product Type as of September 30, 2019 ⁽¹⁾

Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		507		1,440		1,970		3,917		15.2%
South Florida		3,728		126		12		3,866		15.0%
Silicon Valley		3,094		367		-		3,461		13.4%
East Bay		3,297		53		-		3,350		13.0%
Dallas		1,300		1,587		-		2,887		11.2%
Suburban Maryland		394		-		864		1,258		4.8%
Austin		755		1,208		-		1,963		7.6%
Los Angeles County		1,256		317		31		1,604		6.2%
Seattle		1,092		270		28		1,390		5.4%
Orange County		810		101		-		911		3.5%
San Diego County		233		535		-		768		3.0%
Mid-Peninsula		-		94		340		434		1.7%

Total		16,466		6,098		3,245		25,809		100.0%

Percentage by Product Type		63.8%		23.6%		12.6%		100.0%

Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended September 30, 2019 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				94.9%		98.5%		91.1%		94.3%
South Florida				95.8%		88.8%		100.0%		95.6%
Silicon Valley				96.3%		97.2%		-		96.4%
East Bay				98.2%		96.2%		-		98.2%
Dallas				93.6%		89.7%		-		91.5%
Suburban Maryland				83.5%		-		93.1%		90.1%
Austin				97.6%		87.5%		-		91.3%
Los Angeles County				94.6%		95.3%		90.8%		94.7%
Seattle				95.9%		93.8%		100.0%		95.5%
Orange County				94.5%		97.2%		-		94.8%
San Diego County				97.7%		95.5%		-		96.1%
Mid-Peninsula				-		94.1%		94.9%		94.7%
Total				95.9%		93.0%		92.2%		94.7%

Same Park Weighted Average Occupancy Rates by Product Type for the Nine Months Ended September 30, 2019 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				94.0%		97.3%		92.1%		94.2%
South Florida				95.9%		87.7%		88.7%		95.5%
Silicon Valley				96.8%		96.9%		-		96.8%
East Bay				96.6%		96.1%		-		96.5%
Dallas				95.4%		89.6%		-		92.2%
Suburban Maryland				85.3%		-		92.0%		89.9%
Austin				98.2%		86.7%		-		91.1%
Los Angeles County				94.8%		95.8%		93.5%		94.9%
Seattle				95.5%		95.3%		100.0%		95.6%
Orange County				94.7%		98.6%		-		95.1%
San Diego County				97.6%		94.8%		-		95.6%
Mid-Peninsula				-		91.9%		94.3%		93.8%
Total				95.8%		92.5%		92.4%		94.6%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

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Rentable Square Footage of Same Park Properties by Size as of September 30, 2019 ^{(1) (2)}

Markets	Large Tenant		Small Tenant		Total		% of Total

Northern Virginia		2,479		1,438		3,917		15.2%
South Florida		3,107		759		3,866		15.0%
Silicon Valley		2,835		626		3,461		13.4%
East Bay		3,052		298		3,350		13.0%
Dallas		1,758		1,129		2,887		11.2%
Suburban Maryland		650		608		1,258		4.8%
Austin		1,718		245		1,963		7.6%
Los Angeles County		712		892		1,604		6.2%
Seattle		951		439		1,390		5.4%
Orange County		513		398		911		3.5%
San Diego County		-		768		768		3.0%
Mid-Peninsula		-		434		434		1.7%

Total		17,775		8,034		25,809		100.0%

Percentage by Product Type		68.9%		31.1%		100.0%

Same Park Weighted Average Occupancy Rates by Size for the Three Months Ended September 30, 2019 ⁽¹⁾ ⁽²⁾

Markets			Large Tenant		Small Tenant		Total

Northern Virginia				94.1%		94.8%		94.3%
South Florida				95.8%		94.9%		95.6%
Silicon Valley				97.2%		92.9%		96.4%
East Bay				98.1%		99.1%		98.2%
Dallas				91.6%		91.4%		91.5%
Suburban Maryland				91.7%		88.5%		90.1%
Austin				92.9%		80.5%		91.3%
Los Angeles County				93.7%		95.4%		94.7%
Seattle				95.9%		94.8%		95.5%
Orange County				93.4%		96.6%		94.8%
San Diego County				-		96.1%		96.1%
Mid-Peninsula				-		94.7%		94.7%
Total				95.2%		93.7%		94.7%

Same Park Weighted Average Occupancy Rates by Size for the Nine Months Ended September 30, 2019 ⁽¹⁾ ⁽²⁾

Markets			Large Tenant		Small Tenant		Total

Northern Virginia				94.2%		94.4%		94.2%
South Florida				95.8%		94.5%		95.5%
Silicon Valley				97.5%		93.8%		96.8%
East Bay				96.3%		99.2%		96.5%
Dallas				92.1%		92.3%		92.2%
Suburban Maryland				91.8%		87.9%		89.9%
Austin				92.8%		79.3%		91.1%
Los Angeles County				93.7%		95.9%		94.9%
Seattle				95.4%		96.0%		95.6%
Orange County				94.3%		96.2%		95.1%
San Diego County				-		95.6%		95.6%
Mid-Peninsula				-		93.8%		93.8%
Total				95.0%		93.7%		94.6%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

⁽²⁾	The Company’s “large tenant” portfolio consists of properties with average leases greater than or equal to 5,000 square feet while the “small tenant” portfolio consists of properties with average leases less than 5,000 square feet.

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Rentable Square Footage of Properties by Product Type as of September 30, 2019 ⁽¹⁾

Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		1,564		1,440		1,970		4,974		18.1%
South Florida		3,728		126		12		3,866		14.0%
Silicon Valley		3,094		367		-		3,461		12.6%
East Bay		3,297		53		-		3,350		12.2%
Dallas		1,300		1,587		-		2,887		10.5%
Suburban Maryland		394		-		864		1,258		4.6%
Austin		755		1,208		-		1,963		7.1%
Los Angeles County		1,873		317		31		2,221		8.1%
Seattle		1,092		270		28		1,390		5.1%
Orange County		810		101		-		911		3.3%
San Diego County		233		535		-		768		2.8%
Mid-Peninsula		-		94		340		434		1.6%

Total		18,140		6,098		3,245		27,483		100.0%

Percentage by Product Type		66.0%		22.2%		11.8%		100.0%

Weighted Average Occupancy Rates by Product Type for the Three Months Ended September 30, 2019 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				89.8%		98.5%		91.1%		92.8%
South Florida				95.8%		88.8%		100.0%		95.6%
Silicon Valley				96.3%		97.2%		-		96.4%
East Bay				98.2%		96.2%		-		98.2%
Dallas				93.6%		89.7%		-		91.5%
Suburban Maryland				83.5%		-		93.1%		90.1%
Austin				97.6%		87.5%		-		91.3%
Los Angeles County				95.4%		95.3%		90.8%		95.3%
Seattle				95.9%		93.8%		100.0%		95.5%
Orange County				94.5%		97.2%		-		94.8%
San Diego County				97.7%		95.5%		-		96.1%
Mid-Peninsula				-		94.1%		94.9%		94.7%
Total				95.4%		93.0%		92.2%		94.5%

Weighted Average Occupancy Rates by Product Type for the Nine Months Ended September 30, 2019 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				86.2%		97.3%		92.1%		91.7%
South Florida				95.9%		87.7%		88.7%		95.5%
Silicon Valley				96.8%		96.9%		-		96.8%
East Bay				96.6%		96.1%		-		96.5%
Dallas				95.4%		89.6%		-		92.2%
Suburban Maryland				85.3%		-		92.0%		89.9%
Austin				98.2%		86.7%		-		91.1%
Los Angeles County				95.1%		95.8%		93.5%		95.2%
Seattle				95.5%		95.3%		100.0%		95.6%
Orange County				94.7%		98.6%		-		95.1%
San Diego County				97.6%		94.8%		-		95.6%
Mid-Peninsula				-		91.9%		94.3%		93.8%
Total				95.0%		92.5%		92.4%		94.1%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

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Rentable Square Footage of Properties by Size as of September 30, 2019 ^{(1) (2)}

Markets	Large		Small		Total		% of Total


Northern Virginia		3,399		1,575		4,974		18.1%
South Florida		3,107		759		3,866		14.0%
Silicon Valley		2,835		626		3,461		12.6%
East Bay		3,052		298		3,350		12.2%
Dallas		1,758		1,129		2,887		10.5%
Suburban Maryland		650		608		1,258		4.6%
Austin		1,718		245		1,963		7.1%
Los Angeles County		1,255		966		2,221		8.1%
Seattle		951		439		1,390		5.1%
Orange County		513		398		911		3.3%
San Diego County		-		768		768		2.8%
Mid-Peninsula		-		434		434		1.6%

Total		19,238		8,245		27,483		100%

Percentage by Product Type		70.0%		30.0%		100.0%

Weighted Average Occupancy Rates by Size for the Three Months Ended September 30, 2019 ⁽¹⁾ ⁽²⁾

Markets			Large Tenant		Small Tenant		Total

Northern Virginia				92.0%		94.7%		92.8%
South Florida				95.8%		94.9%		95.6%
Silicon Valley				97.2%		92.9%		96.4%
East Bay				98.1%		99.1%		98.2%
Dallas				91.6%		91.4%		91.5%
Suburban Maryland				91.7%		88.5%		90.1%
Austin				92.9%		80.5%		91.3%
Los Angeles County				94.8%		95.7%		95.3%
Seattle				95.9%		94.8%		95.5%
Orange County				93.4%		96.6%		94.8%
San Diego County				-		96.1%		96.1%
Mid-Peninsula				-		94.7%		94.7%
Total				94.8%		93.8%		94.5%

Weighted Average Occupancy Rates by Size for the Nine Months Ended September 30, 2019 ⁽¹⁾ ⁽²⁾

Markets			Large Tenant		Small Tenant		Total

Northern Virginia				90.7%		94.0%		91.7%
South Florida				95.8%		94.5%		95.5%
Silicon Valley				97.5%		93.8%		96.8%
East Bay				96.3%		99.2%		96.5%
Dallas				92.1%		92.3%		92.2%
Suburban Maryland				91.8%		87.9%		89.9%
Austin				92.8%		79.3%		91.1%
Los Angeles County				94.1%		96.1%		95.2%
Seattle				95.4%		96.0%		95.6%
Orange County				94.3%		96.2%		95.1%
San Diego County				-		95.6%		95.6%
Mid-Peninsula				-		93.8%		93.8%
Total				94.3%		93.6%		94.1%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

⁽²⁾	The Company’s “large tenant” portfolio consists of properties with average leases greater than or equal to 5,000 square feet while the “small tenant” portfolio consists of properties with average leases less than 5,000 square feet.

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Lease Expirations - Industrial ⁽¹⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		%		Rental Income

2019		1,646	$	25,582		10.5%		5.8%
2020		4,114		51,904		21.3%		11.9%
2021		3,101		44,169		18.2%		10.1%
2022		2,881		40,577		16.7%		9.2%
2023		2,080		28,512		11.7%		6.5%
Thereafter		3,553		52,506		21.6%		12.0%

Total		17,375	$	243,250		100.0%		55.5%


Lease Expirations - Flex ⁽¹⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		%		Rental Income

2019		428	$	8,331		7.3%		2.0%
2020		1,275		23,327		20.5%		5.3%
2021		1,294		24,615		21.7%		5.6%
2022		1,084		22,984		20.2%		5.3%
2023		502		9,878		8.7%		2.3%
Thereafter		1,141		24,503		21.6%		5.6%

Total		5,724	$	113,638		100.0%		26.1%


Lease Expirations - Office ⁽¹⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		%		Rental Income

2019		110	$	2,600		3.2%		0.6%
2020		711		19,274		24.1%		4.4%
2021		517		13,048		16.2%		3.0%
2022		502		13,966		17.4%		3.2%
2023		412		10,443		13.0%		2.4%
Thereafter		769		20,995		26.1%		4.8%

Total		3,021	$	80,326		100.0%		18.4%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

⁽²⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-letting of expiring spaces.

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Lease Expirations - Southern California

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		225	$	4,913		7.5%		1.1%
2020		1,384		20,300		31.1%		4.6%
2021		764		14,483		22.2%		3.3%
2022		707		12,803		19.6%		2.9%
2023		267		5,075		7.9%		1.2%
Thereafter		385		7,632		11.7%		1.7%

Total		3,732	$	65,206		100.0%		14.8%


Lease Expirations - Northern California

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		942	$	17,902		14.6%		4.1%
2020		1,286		23,186		19.0%		5.3%
2021		1,193		21,116		17.3%		4.8%
2022		1,062		17,503		14.3%		4.0%
2023		786		13,047		10.7%		3.0%
Thereafter		1,761		29,465		24.1%		6.7%

Total		7,030	$	122,219		100.0%		27.9%


Lease Expirations - Austin

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		67	$	1,312		4.1%		0.3%
2020		317		4,928		15.2%		1.1%
2021		347		5,998		18.5%		1.4%
2022		335		5,869		18.1%		1.3%
2023		178		3,133		9.7%		0.7%
Thereafter		546		11,134		34.4%		2.5%

Total		1,790	$	32,374		100.0%		7.3%


Lease Expirations - Dallas

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		195	$	2,276		6.4%		0.5%
2020		663		7,826		22.0%		1.8%
2021		572		7,780		21.8%		1.8%
2022		341		4,708		13.2%		1.1%
2023		365		4,839		13.6%		1.1%
Thereafter		548		8,174		23.0%		1.9%

Total		2,684	$	35,603		100.0%		8.2%

⁽¹⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-letting of expiring spaces.

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Lease Expirations - South Florida

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		318	$	3,096		6.9%		0.7%
2020		785		9,445		21.2%		2.2%
2021		786		9,894		22.2%		2.3%
2022		662		8,078		18.1%		1.8%
2023		587		7,150		16.0%		1.6%
Thereafter		551		6,958		15.6%		1.6%

Total		3,689	$	44,621		100.0%		10.2%


Lease Expirations - Northern Virginia

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		350	$	5,671		6.2%		1.3%
2020		1,066		18,978		20.8%		4.3%
2021		795		14,300		15.7%		3.3%
2022		991		22,327		24.5%		5.1%
2023		412		8,281		9.1%		1.9%
Thereafter		1,051		21,565		23.7%		5.0%

Total		4,665	$	91,122		100.0%		20.9%


Lease Expirations - Suburban Maryland ⁽²⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		29	$	467		1.8%		0.2%
2020		188		4,573		17.6%		1.1%
2021		197		3,761		14.5%		0.8%
2022		160		3,017		11.6%		0.7%
2023		213		4,683		18.0%		1.1%
Thereafter		371		9,478		36.5%		2.2%

Total		1,158	$	25,979		100.0%		6.1%


Lease Expirations - Seattle

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		%		Rental Income

2019		58	$	876		4.4%		0.2%
2020		411		5,269		26.2%		1.2%
2021		258		4,500		22.4%		1.0%
2022		209		3,222		16.0%		0.8%
2023		186		2,625		13.1%		0.6%
Thereafter		250		3,598		17.9%		0.8%

Total		1,372	$	20,090		100.0%		4.6%

⁽¹⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-letting of expiring spaces.

⁽²⁾	Excludes assets held for sale as of September 30, 2019.

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Lease Expirations - Large Tenant Portfolio ⁽¹⁾ ⁽²⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽⁴⁾		%		Rental Income

2019		1,491	$	25,211		9.0%		5.8%
2020		3,878		51,870		18.5%		11.9%
2021		2,897		41,791		14.9%		9.6%
2022		3,200		51,830		18.5%		11.8%
2023		2,245		32,626		11.6%		7.5%
Thereafter		4,606		76,991		27.5%		17.6%

Total		18,317	$	280,319		100.0%		64.2%


Lease Expirations - Small Tenant Portfolio ⁽¹⁾ ⁽³⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽⁴⁾		%		Rental Income

2019		693	$	11,302		7.2%		2.6%
2020		2,222		42,635		27.2%		9.7%
2021		2,015		40,041		25.5%		9.1%
2022		1,267		25,697		16.4%		5.9%
2023		749		16,207		10.3%		3.7%
Thereafter		857		21,013		13.4%		4.8%

Total		7,803	$	156,895		100.0%		35.8%


Lease Expirations - Total Portfolio ⁽¹⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽⁴⁾		%		Rental Income

2019		2,184	$	36,513		8.4%		8.4%
2020		6,100		94,505		21.6%		21.6%
2021		4,912		81,832		18.7%		18.7%
2022		4,467		77,527		17.7%		17.7%
2023		2,994		48,833		11.2%		11.2%
Thereafter		5,463		98,004		22.4%		22.4%

Total		26,120	$	437,214		100.0%		100.0%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

⁽²⁾	Large tenant portfolio consists of properties with average leases greater than or equal to 5,000 square feet.

⁽³⁾	Small tenant portfolio consists of properties with average leases less than 5,000 square feet.

⁽⁴⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-letting of expiring spaces.

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	Total Portfolio Activity ⁽¹⁾
	Wtd. Avg.				Leasing				Customer				Transaction Costs				Transaction				Cash Rental Rate
	Occupancy				Volume				Retention				per Executed Foot				Costs ⁽²⁾				Change ⁽³⁾
	QTD		YTD		QTD		YTD		QTD		YTD		QTD		YTD		QTD		YTD		QTD		YTD
Northern Virginia		92.8%		91.7%		426,000		1,104,000		73.5%		76.1%	$	8.48	$	6.99		14.1%		11.3%		-8.4%		-3.1%

South Florida		95.6%		95.5%		217,000		664,000		66.7%		49.9%	$	1.18	$	1.86		2.8%		3.7%		13.2%		13.4%

Silicon Valley		96.4%		96.8%		376,000		654,000		89.9%		81.0%	$	2.12	$	2.13		2.2%		2.3%		22.1%		20.4%

East Bay		98.2%		96.5%		73,000		459,000		15.0%		39.8%	$	2.12	$	2.13		3.1%		3.2%		16.2%		23.5%

Dallas		91.5%		92.2%		216,000		650,000		58.3%		63.0%	$	5.74	$	5.51		14.7%		12.5%		5.9%		7.3%

Suburban Maryland		90.1%		89.9%		70,000		144,000		89.4%		66.0%	$	4.23	$	8.09		6.9%		11.8%		-0.5%		-3.8%

Austin		91.3%		91.1%		110,000		268,000		70.2%		69.9%	$	4.30	$	4.36		7.1%		7.8%		8.1%		7.0%

Los Angeles		95.3%		95.2%		142,000		480,000		78.2%		74.1%	$	1.44	$	1.56		2.6%		2.9%		10.5%		13.9%

Seattle		95.5%		95.6%		188,000		340,000		91.3%		78.4%	$	1.04	$	0.99		1.7%		1.8%		16.3%		16.8%

Orange County		94.8%		95.1%		61,000		175,000		39.1%		52.4%	$	2.33	$	2.28		3.4%		3.1%		0.9%		2.3%

San Diego		96.1%		95.6%		84,000		258,000		77.1%		69.2%	$	1.97	$	2.05		4.4%		4.0%		3.7%		6.4%

Mid-Peninsula		94.7%		93.8%		41,000		104,000		80.5%		64.6%	$	1.77	$	1.18		1.7%		1.2%		9.5%		9.2%


Company Totals by Market		94.5%		94.1%		2,004,000		5,300,000		73.7%		66.3%	$	3.80	$	3.66		6.0%		5.9%		6.5%		8.5%


Industrial		95.4%		95.0%		1,259,000		3,410,000		74.1%		64.3%	$	1.81	$	2.12		3.0%		3.6%		13.6%		14.1%

Flex		93.0%		92.5%		455,000		1,161,000		76.4%		69.8%	$	4.12	$	4.96		7.3%		8.3%		5.6%		7.3%

Office		92.2%		92.4%		290,000		729,000		68.0%		70.1%	$	11.91	$	8.78		14.0%		10.5%		-7.1%		-2.5%


Company Totals by Type		94.5%		94.1%		2,004,000		5,300,000		73.7%		66.3%	$	3.80	$	3.66		6.0%		5.9%		6.5%		8.5%

⁽¹⁾	Excludes assets held for sale as of September 30, 2019.

⁽²⁾	Transaction cost percentages are computed by taking the total transaction costs divided by the total rents (including estimated expense recoveries) over the term of the lease.

⁽³⁾

Cash rental rate change percentages are computed by taking the percentage difference between outgoing rents (including estimated expense recoveries) and incoming rents (including estimated expense recoveries) for leases executed during the period. Leases executed on spaces vacant for more than the preceding twelve months have been excluded.

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Total Costs ⁽¹⁾

Construction

Property Information

Location

Apartment Units

(in thousands)

Completion

Highgate at the Mile

Tysons, VA

395

115,426

Q4 2017

As of September 30, 2019

Period end occupancy

94.7%

Average rent per unit ⁽²⁾

$ 2,119

⁽¹⁾	The total costs of the project include contributed land value of $21.0 million plus unrealized land appreciation of $6.0 million. The unrealized land appreciation of $6.0 million is not recorded on our balance sheet.

⁽²⁾	Average rent per unit is defined as the total potential monthly rental revenue (i.e. actual rent for occupied apartment units plus market rent for vacant apartment units) divided by the number of rentable units.